Chapters 4-6

Question 1

Annual Percentage Yield (APY)

Answer 1

The percentage rate expressing the total amount of interest that would be received on a $100 deposit based on the annual rate and frequency of compounding for a 365 day period

Question 2

Asset Management Account

Answer 2

An all in one account that includes savings, checking, borrowing, investing, and other financial services for a single fee

Question 3

ATM

Answer 3

A computer terminal used to conduct banking transactions

Question 4

Certificate of Deposit

Answer 4

A savings plan requiring that a certain amount be left on deposit for a stated time period to earn a specified interest rate

Question 5

Commercial Bank

Answer 5

A financial institution that offers a full range of financial services to individuals, businesses, and government agencies

Question 6

Compounding

Answer 6

A process that calculates interest based on previously earned interest

Question 7

Credit Union

Answer 7

A user owned non profit cooperative financial institution that is organized for the benefit of its members

Question 8

Debit Card

Answer 8

A plastic access card used in computerized bank transactions

Question 9

Money Market Account

Answer 9

A savings account offered by banks, savings and loan associations, and credit unions that requires a minimum balance and has earnings based on market interest rates

Question 10

Money Market Fund

Answer 10

A savings investment plan offered by investment companies, with earnings based on investments in various short term financial instruments

Question 11

Mutual Savings Bank

Answer 11

A financial institution that is owned by depositors and specializes in savings accounts and mortgage loans

Question 12

Overdraft Protection

Answer 12

An automatic loan made to cover the amount of checks written in excess of the available balance in the checking account

Question 13

Rate of Return

Answer 13

The percentage of increase in the value of savings as a result of interest earned, also called yield

Question 14

Savings and Loan Association (S&L)

Answer 14

A financial institution that traditionally specialized in savings accounts and mortgage loans

Question 15

Trust

Answer 15

A legal agreement that provides for the management and control of assets by one party for the benefit of another

Question 16

Annual Percentage Rate (APR)

Answer 16

The percentage cost of credit on a yearly basis. The APR yields a true rate of interest for comparisons with other sources of credit

Question 17

Capacity

Answer 17

The borrowers ability to pay additional debts

Question 18

Capital

Answer 18

The borrowers assets or net worth

Question 19

Character

Answer 19

The borrowers attitude toward his or her credit obligations

Question 20

Closed end credit

Answer 20

One time loan that borrower pays back in a specified period of time and in payments of equal amounts

Question 21

Collateral

Answer 21

A valuable asset that is pledged to ensure loan payments

Question 22

Conditions

Answer 22

The general economic conditions that can affect a borrowers ability to repay a loan

Question 23

Consumer credit

Answer 23

The use of credit for personal needs (except a home mortgage)

Question 24

Credit

Answer 24

An arrangement to receive cash, goods, or services now and pay for them in the future

Question 25

Fair Credit Billing Act

Answer 25

Sets procedures for promptly correcting billing mistakes, refusing to make credit card payments on defective goods, and promptly crediting payments

Question 26

Finance Charge

Answer 26

The total dollar amount paid to use credit

Question 27

Interest

Answer 27

A periodic charge for the use of credit

Question 28

Line of Credit

Answer 28

A short term loan that is approved before you actually need the money

Question 29

Mobile Commerce

Answer 29

The ability to purchase using a mobile device

Question 30

Open End Credit

Answer 30

A line of credit in which loans are made on a continuous basis and the borrower is billed periodically for at least partial payment

Question 31

Revolving Check Credit

Answer 31

A prearranged loan from a bank for a specified amount

Question 32

Simple interest

Answer 32

Interest computed on principal only and without compounding

Question 33

Arbitration

Answer 33

The settlement of a difference by a third party whose decision is legally binding

Question 34

Class action suit

Answer 34

A legal action taken by a few individuals on behalf of all the people who have suffered the same alleged injustice

Question 35

Legal aid society

Answer 35

One of a network of publicly supported community law offices that provide legal assistance to consumers who cannot afford their own attorney

Question 36

Mediation

Answer 36

The attempt by an impartial third party to resolve a difference between two parties through discussion and negotiation

Question 37

Service Contract

Answer 37

An agreement between a business and a consumer to cover the repair costs of a product

Question 38

Small Claims Court

Answer 38

A court that settles legal differences involving amounts below a set limit and employs a process in which the litigants usually do not use a lawyer

Question 39

Warranty

Answer 39

A written guarantee from the manufacturer or distributor of a product that specified the conditions under which the product can be returned, replaced, or repaired